Doubts over ICC event

by COLVILLE MOUNSEY

colvillemounsey@nationnews.com

BARBADOS’ HOSTING OF THE International Cricket Council’s (ICC) T20 World Cup matches, including the final, could be considered an economic gamble.

According to Pro Vice-Chancellor of the University of the West Indies (UWI) board for undergraduate studies, Professor Justin Robinson, the net long-term impact will depend on the fiscal cost associated with hosting the event.

His position was supported by former UWI banking and finance lecturer Jeremy Stephen, who pointed out that one cannot realistically expect to recover tens of millions of dollars over a month.

Reports

Using the region’s hosting of the 2007 ICC Cricket World Cup as the benchmark, Robinson said that based on reports from Scotia Economics and the International Monetary Fund around that period, while there was a “massive economic boost” as a result of the infrastructural investment, “the net effect could well be negative in light of the heavy fiscal costs and the already high debt burden in the region”.

Scotia Economics reported that governments invested around US$500 million on airports, roads, power generation, and information and communications technology; around US$300 million on stadium development, and another US$40 million on temporary facilities. It also estimated that more than 10 000 people were employed.

“Hosting such an event has the potential to provide net economic benefits. Skilful negotiations around terms and conditions, and careful cost management, are essential if the state and taxpayers are not to end up as losers, while the ICC and other vested interests walk away with the lion’s share of the financial benefits.

“We are seeing more and more countries such as Australia during the Commonwealth Games, deciding that the trade-off is not worth it,” Robinson told the

MIDWEEK NATION.

“The economic benefits are generally accepted to relate to infrastructure development, a boost to the tourism and hospitality sector, job creation around hosting the event, and enhanced global visibility and reputation. The economic costs are accepted to relate to the financial costs of infrastructure investment.

However, challenges emerge in terms of excess capacity where facilities are underutilised after the event, security costs, negative environmental impacts, and the opportunity cost of diverting public spending and investment away from other important areas,” he said.

The UWI academic said the ICC and the then West Indies Cricket Board (now Cricket West Indies) were the biggest beneficiaries of the 2007 World Cup. He explained that the tournament netted an overall profit of US$53.9 million. This is according to the audited report of the ICC Cricket World Cup West Indies 2007 Incorporated (CWC 2007), which was presented by auditors KPMG at the CWC 2007 board’s final meeting.

Of the US$53.9 million, US$29.3 million was paid out to the local organising committees on behalf of the Caribbean governments, which were the official hosts. The WICB also shared in bounty with its 25 per cent of its profit portion.

Concurring with his fellow economist, Stephen said investment in stadiums is unlikely to yield longterm financial returns, as in many instances these facilities go underutilised after the event for which they were built, or refurbished, has passed.

Loan

He said that Brazil’s hosting of the 2014 FIFA World Cup was an example of billions of dollars invested that were not justified in the long term. Recently, Government backed a $50 million loan for Kensington Oval Management Inc. for the refurbishment of Kensington Oval ahead of the World Cup slated for June.

“The problem is that the long-term value of upgrading infrastructure means that a large capacity might not ever be seen again on the island after the event. The other issue is that you might not be able to sustain the capacity for any extended period. Most sporting events carry a very good cash infusion into the economy in the short term, but it is hardly ever justified in the long run,” Stephen said.

“ Kensington Oval, for all intents and purposes, given the lack of investment in Cricket West Indies, is a white elephant. It is only ever full when the English come around and even then, it is not at capacity unless it is T20 cricket. The days of Test matches providing the best returns are gone. The cricket stadium built in Grenada for the 2007 World Cup is now a rust bucket. It makes no sense investing in stadiums in the short term, unless one can apply the model which sees them filled every weekend.”

(FP)